## Facts

- Eskimo Pie Corporation licensed ice-cream novelty branding and related rights through an integrated set of writings executed around December 30, 1960, later modified in 1961 and 1962 (the “Package Deal”).
- Under the Package Deal, Whitelawn Dairies, Inc. received rights to manufacture certain Eskimo-branded products, and Supermarket Advisory Sales, Inc. (SAS) received the right to purchase and sell specified Eskimo products in the New York City metropolitan area.
- The writings expressly described SAS’s territorial purchasing/selling right as “non-exclusive.”
- Beginning in 1962–63, Eskimo sold Eskimo-branded products in the same territory and authorized other firms to manufacture and/or sell Eskimo products there.
- Whitelawn/SAS asserted Eskimo breached the Package Deal by licensing competitors and competing directly; Eskimo asserted counter-breaches by Whitelawn/SAS.
- In pretrial proceedings, the parties agreed the Package Deal was integrated and contained all essential terms agreed upon.

## Issues

1. Whether parol evidence of prior or contemporaneous understandings is admissible to show that an integrated agreement’s express “non-exclusive” territorial grant actually meant a substantially exclusive arrangement with limited exceptions.
2. Whether the term “non-exclusive,” as used in the integrated writings, was ambiguous such that extrinsic evidence could be admitted to “interpret” it rather than contradict it.

## Decision

- The court ruled the Package Deal was an integrated agreement for purposes of the parol-evidence rule.
- The court held Whitelawn/SAS could not introduce parol evidence that “non-exclusive” carried a special meaning imposing major, unwritten limits on Eskimo’s right to license others or compete in the territory.
- The court concluded the proffered evidence would vary or contradict the plain written term by transforming a non-exclusive grant into effective exclusivity subject to exceptions.
- Accordingly, the court excluded the parol evidence on this point in anticipation of trial.

## Legal Principles

- When parties agree their contract is integrated and it is unambiguous on a disputed term, prior or contemporaneous agreements or understandings are inadmissible to vary or contradict the writing.
- Extrinsic evidence offered as “interpretation” is barred if its practical effect is to negate or reverse a clear allocation of rights expressed in the contract.
- A party cannot use parol evidence to add substantial restrictions that sophisticated parties could have included expressly, particularly where the written term is direct and commercially conventional (e.g., “non-exclusive”).

## Conclusion

The court applied the parol-evidence rule to prevent Whitelawn/SAS from recasting an integrated contract’s explicit “non-exclusive” territorial rights into near exclusivity through alleged prior understandings, leaving the parties to litigate breach claims based on the written allocation of rights.


Eskimo Pie Corp. v. Whitelawn Dairies, Inc., 284 F. Supp. 987 (S.D.N.Y. 1968)